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Crafting a Customer Value Proposition and Positioning.pptx
The document discusses the importance of crafting a strong customer value proposition and brand positioning in marketing strategy, emphasizing that products and services must stand out in the market. It outlines how to identify consumer needs and preferences, develop distinct value propositions, and create effective positioning strategies that resonate with target audiences. The text also highlights the role of functional, psychological, and monetary value in influencing customer choices and satisfaction.
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Crafting a Customer Value Proposition and Positioning.pptx
- 1. Crafting a CustomerValue Proposition and Positioning - Dr. Vivek Pani Gumparthi
- 2. Introduction • No companycan win if its products and services resemble every other product and offering. • As part of the strategic brand management process, each offering must represent the right kinds of things in the minds of the target market. • Creating a compelling, well-differentiated brand position requires a keen understanding of consumer needs and wants, company capabilities and competitive actions. • It also requires disciplined but creative thinking.
- 3. Developing a ValueProposition and Positioning • A key aspect of marketing strategy is developing a value proposition and positioning a company’s offering to target customers. • A company discovers different needs and groups of customers in the marketplace, targets those it can satisfy in a superior way, and then develops a value proposition and positions its offerings so the target customers recognize the distinctive benefits of its offerings. • By clearly articulating its value proposition and positioning, compliances can deliver high customer value and satisfaction, which lead to high customer value and satisfaction, which lead to high repeat purchases and ultimately to greater company profitability.
- 4. Developing a ValueProposition • How do customers ultimately make choices? • They tend to be value maximizers, within the bounds of search costs and limited knowledge, mobility and income. • Customers choose – for whatever reason – the offer they believe will deliver the highest value and act on it. • Whether the offer lives up to expectations affects customer satisfaction and the probability that the customer will purchase the product again.
- 5. • Depending onthe needs of customers, an offering can create value across three domains: functional, psychological and monetary. • Functional Value reflects the benefits and costs that are directly related to an offering’s performance. • Among the offering attributes that create functional value are performance, reliability, durability, compatibility, ease of use, customization, form, style and packaging. • Functional value is often the primary consideration for offerings that are regarded as mostly utilitarian, such as, pen, paper, office equipment etc.
- 6. • Psychological Valueencompasses the psychological benefits and costs associated with the offering. • Psychological value extends beyond the functional benefits to create emotional benefits for target customers. • For example, customers might value the emotional benefits they derive from a car (e.g. the joy of driving a high – performance automobile and the social status and lifestyle its ownership conveys). • Psychological value is of primary importance in luxury and fashion categories, where customers actively seek emotional and self- expressive benefits.
- 7. • Monetary Valueincludes the financial benefits and costs associated with the offering. • Offering attributes that create monetary value include price, fees, discounts and rebates along with various monetary costs associated with using and disposing of the offering. • Although monetary value is typically associated with costs, an offering can also include such monetary benefits as monetary bonuses, cash- back offers, cash prizes, financial rewards and low – interest financing. • Monetary value is often the prevailing choice criterion for undifferentiated offerings in commoditized categories.
- 8. • Across allthree dimensions – functional, psychological and monetary – customer value is the difference between the prospective customer’s evaluation of all the benefits and costs of an offering and her or his evaluation of the costs and benefits of the perceived alternatives.
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- 10. • Total customerbenefit is the perceived value of the bundle of functional, psychological and monetary benefits customers expect from a given market offering because of the product, service and image. • Total customer cost is the perceived bundle of functional, psychological and monetary cists customers will incur in evaluating, obtaining, using and disposing of the given market offering. • The customer value proposition is based on the difference between benefits the customer gets and the costs he or she assumes for different choices. • The marketer can increase the value of the offering by raising functional, psychological and monetary benefits and/or reducing the corresponding costs. • The value proposition is based on the difference between benefits the customer gets and the costs he or she assumes for different choices.
- 11. • Very often,managers conducts a customer value analysis to reveal the company’s strengths and weaknesses relative to those of various competitors. • The steps in this analysis are as follows: 1 Identify the relevant attributes and benefits that customers value. 2 Assess the relative importance of these attributes and benefits. 3 Assess the company’s and competitor’s performance on the key attributes/benefits. 4 Monitor customer value over time.
- 12. Developing a PositioningStrategy • Positioning is the act of designing a company’s offering and image to occupy a distinctive place in the minds of the target market. • The goal is to locate the brand in the minds of consumers to maximize the potential benefit to the firm. • A good brand positioning helps guide marketing strategy by clarifying the brand’s essence, identifying the goals it helps the consumer achieve and showing how it does so in a unique way. • Everyone in the organization should understand the brand positioning and use it as context for making decisions.
- 13. • A well-positionedbrand should be distinctive in its meaning and execution. • A good positioning has one foot in the present and one in the future. • It needs to be somewhat aspirational, so the brand has room to grow and improve. • Positioning on the basis of the current state of the market is not forward-looking enough, but at the same time, the positioning cannot be so removed from reality that it is essentially unobtainable. • The real trick is to strike just the right balance between what the brand is and what it could be. • One result of positioning is the successful creation of a customer-focused value proposition, a cogent reason why the target market should buy a product or service.
- 14. Essentials of Positioning •Choosing a frame of reference by identifying the target market and relevant competition • Identifying the points of parity and points of difference brand associations given that frame of reference, and • Creating a brand mantra summarizing the positioning and essence of the brand.
- 15. Success of theMarketing Management Process • When consumers’ perception of a product matches a firm’s planned position for it, the marketing management process proves to be successful. • The final decision on how to use the four Ps constitutes a firm’s marketing strategy.
- 16. Competitive Frame of Reference •Competitive frame of reference • Defines which other brands a brand competes with and which should thus be the focus of competitive analysis • Identifying and analyzing competitors Does Rolex compete with Titan, Mercedes with Maruti?
- 17. Identifying Competitors • Agood starting point in defining a competitive frame of reference for brand positioning is category membership – the products or sets of products with which a brand competes and that function as close substitutes. • If at all Kinley is trying to identify competitors, it is not just Aquafina or bisleri it is also Coke, Pepsi, Amul Masti etc. • The range of a company’s actual and potential competitors, however, cn be much broader than the obvious. • To enter new markets, a brand with growth intentions may need a broader or may be even a more aspirational competitive frame. • And it may be more likely to be hurt by emerging competitors or new technologies than by current competitors.
- 18. Competitive Frame ofReference • Firms should broaden their competitive frame to invoke more advantageous comparisons. For example: The U.S. Armed Forces changed the focus of its recruitment advertising from the military as patriotic duty to the military as a place to learn leadership skills – a much more rational than emotional pitch that better competes with private industry.
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- 20. Competitive Frame ofReference Once a company has identified its main competitors and their strategies, it must ask: 1. What is each competitor seeking in the marketplace? 2. What drives each competitor’s behavior? 3. Many factors shape a competitor’s objectives, including size, history, current management and financial situation. 4. If the competitor is a division of a larger company, its important to know whether the parent company is running it to diversify it or to run it as a standalone business.
- 21. Points-of-Difference • Points-of-difference (PODs) •Attributes/benefits that consumers strongly associate with a brand, positively evaluate, and believe they could not find to the same extent with a competitive brand
- 22. Points of Difference •Associations that make up points of difference can be based on virtually any type of attribute or benefit. • Louis Vuitton may seek a point-of-difference as having the most stylish handbags, Energizer as having the longest-lasting battery and Fidelity Investments as offering the best financial advice and planning. • Strong brands often have multiple points-of-difference. Apple (design, ease of use and software), Nike (performance, innovative technology and winning) and Southwest Airlines (value, reliability and fun personality). • Creating strong, favorable and unique associations is a real challenge, but an essential one for competitive brand positioning. • Successfully positioning a new product in a well-established market is very challenging when compared to a new burgeoning market.
- 23. Criteria to DetermineWhether a Brand Association Can Function as a PoD • Desirability (Desirable to Consumer - Personally relevant to them) • Deliverability (Firm must have capabilities to feasibly create and maintain the brand association in the minds of consumers) and • Differentiability (Customer must see the brand association as distinctive and superior to relevant competitors)
- 24. • POD criteria Points-of-Difference andPoints-of-Parity Desirable Deliverable Differentiating
- 25. Points-of-Parity • Points-of-parity (POPs) •Attribute/benefit associations that are not necessarily unique to the brand but may in fact be shared with other brands. • Did Tata Nano have point of parity with “cars”?
- 26. • POP forms Points-of-Difference andPoints-of-Parity Category The items which the customer considers essential for the category. Building, teachers. Sports ground etc. for a school. Correlational These are the associations that follow as a consequence of establishing a point of parity. Cheap products often are considered to be bad quality. Competitive Measures taken to overcome possible weaknesses vis-à- vis competition. 10 years warranty.
- 27. Straddle Positioning • Occasionally,a company will be able to straddle two frames of reference with one set of points-of-difference and points-of-parity. • In these cases, the points-of-difference for one category become points-of-parity for the other and vice versa. • Subway restaurants are positioned as offering healthy, good-tasting sandwiches. • This positioning allows the brand to create a PoP on taste and a PoD on health with respect to quick-serve restaurants such as McDonald’s and Burger King and at the same time, a PoP on health and a PoD on taste with respect to health food restaurants and Cafes.
- 28. Straddle Positioning • Althougha straddle positioning is often attractive as a means of reconciling potentially conflicting consumer goals and creating a ‘best of both worlds’ solution, it also carries an extra burden. • If PoP and PoD are not credible, the brand may not be viewed as a legitimate player in either category.
- 29. Points-of-Difference and Points-of-Parity • Choosingspecific POPs and PODs • Compétitive advantage • Means of differentiation • Perceptual map • Emotional branding
- 30. Competitive Advantage • Tobuild a strong brand and to avoid getting commoditized, marketers are encouraged to build a sustainable competitive advantage. • Sustainable competitive advantage is a company’s ability to perform in one or more ways that competitors cannot or will not match. • Pharmaceutical companies are developing biologics, medicines produce using the body’s own cells rather than through chemical reactions in a lab, because they are difficult to copy. • Interestingly few competitive advantages are inherently sustainable. At best, they may be leverageable. • A leverageable advantage is one that a company can use as a springboard to new advantages, much as Microsoft has leveraged its operating system to Microsoft Office and then to networking applications. • Broadly, a company that hopes to stay for a long haul has to be in the business of continuously inventing new advantages that can serve as the basis of points-of- difference.
- 31. Means of Differentiation •Any product or service benefit that is sufficiently desirable, deliverable and differentiating can serve as a point-of-difference for a brand. • The obvious and often the most compelling, means of differentiation for consumers are benefits related to performance. • Swatch offers colorful, fashionable watches;
- 32. Emotional Branding • Manymarketing experts believe a brand positioning should have both rational and emotional components. • In other words, it should contain points-of-difference and points-of-parity that appeal to both the head and the heart. • Mederma (Scar Treatment Product) – Women did not just buy for physical treatment but also to increase their self-esteem.
- 33. Establishing a BrandPositioning • Communicating category membership Announcing category benefits Comparing to exemplars Relying on product descriptor Airbnb Online platform for rental accommodations A premium hotel can mention its luxurious rooms, restaurant Bar, swimming pool. Spa etc. A comparison with other premium hotels in the city.
- 34. Positioning Example: TATANANO • Was planned to be positioned as an aspirational product for people wanting to upgrade from a two-wheeler to a car. • However, TATA group and media positioned NANO as a cheap (instead of ‘affordable’) car in the minds of consumers even before the launch. • Wrong positioning was a major reason why the car did not sell. • Although the company tried to reposition the car later, it did not succeed. • A well-entrenched position is difficult to change. • Therefore, companies must be careful in positioning.
- 35. Key Takeaways • Digitaltechnologies have caused a significant power shift in the world of marketing. • Earlier, companies held all the cards. They controlled the information shared with consumers and managed positioning easily. • Now consumers have the largest voice. • If you don’t brand yourself, others will.
- 36. Monitoring Competition • Variablesin assessing potential competitors • Share of market • Share of mind • Brand Recall • Share of heart • Brand Preference Market Share = Sale / Market Size Quantity (units) or Value (Amount Rs or U$) LG CTVs = 10000 TVs in a month, the television market size is 50,000 TVs Market Share = 10000/50000 = 30% Av price of an LG TV is Rs. 20000. overall average price is 22000. Sale of LG in Rs terms = 20000X10000 = 20,0000000 (Rs 20 crore) Market Size in terms of Rs. = 50000X22000 = 110,00000 (110 crore) LG Market Share in terms of amount = 20 crore / 110 crore = 18%
- 37. Alternative Approaches to Positioning •Brand narratives and storytelling • Setting • Cast • Narrative arc • Language 1. The story 2. The customer’s engagement with the brand 3. The visual language or expression of the brand 4. The manner in which the brand engages the senses. 5. The role the brand plays in the lives of the people. Cultural branding • Fair and lovely (Glow and Lovely) taps into the cultural notion of beauty. • Bullet feeds notions of machismo. • Hero Honda is about thrift.
- 38. Positioning/Branding for A SmallBusiness • Find compelling product performance advantage • Focus on building one or two strong brands based on one or two key associations • Encourage product trial in any way possible • Develop cohesive digital strategy to make the brand “bigger and better” • Create buzz and a loyal brand community • Employ a well-integrated set of brand elements • Leverage as many secondary associations as possible • Creatively conduct low- cost marketing research
- 39. Stray Thoughts onPositioning • Positioning starts with a product. • A piece of merchandise, a service, a company, an institution, or even a person. • Perhaps yourself. • But positioning is not what you do to a product. • Positioning is what you do to the mind of the prospect. • That is, you position the product in the mind of the prospect. • So its incorrect to call the concept ‘product positioning’. As if you were doing something to the product itself.
- 40. • Not thatpositioning doesn’t involve change. It does. • But changes made in the name, the price, and the package are really not changes in the product at all. • They are basically cosmetic changes done for the purpose of securing a worthwhile position in the prospect’s mind. • Positioning is also the first body of thought that comes to grips with the problems of getting heard in our overcommunicated society. • Positioning, as a concept, has really changed advertising.
- 41. • “We’re thethird largest-selling coffee in America,” said the Sanka Radio commercials. • The third largest? Whatever happened to those good old advertising words like ‘first’ and ‘best’ and ‘finest’? • Well, the good old advertising days are gone forever and so are the words. • Today you find comparatives, not superlatives. • “Avis is only No.2 in rent-a-cars, so why go with us? We try harder.” • “Honeywell, the other computer company”
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Editor's Notes
- #16 Decisions about the competitive frame of reference are closely linked to target market decisions. Deciding to target a certain type of consumer can define the nature of competition because certain firms have decided to target that segment in the past (or plan to do so in the future) or because consumers in that segment may already look to certain products or brands in their purchase decisions. A good starting point in defining a competitive frame of reference for brand positioning is category membership—the products or sets of products with which a brand competes and that function as close substitutes. The range of a company’s actual and potential competitors, however, can be much broader than the obvious. Using the market approach, we define competitors as companies that satisfy the same customer need. Chapter 2 described how to conduct a SWOT analysis that includes a competitive analysis. A company needs to gather information about each competitor’s real and perceived strengths and weaknesses. Once a company has identified its main competitors and their strategies, it must ask: What is each competitor seeking in the marketplace? What drives each competitor’s behavior?
- #19 Table 10.2 shows the results of a company survey that asked customers to rate its three competitors, A, B, and C, on five attributes. Competitor A turns out to be well known and respected for producing high-quality products sold by a good sales force, but poor at providing product availability and technical assistance. Competitor B is good across the board and excellent in product availability and sales force. Competitor C rates poor to fair on most attributes. This result suggests that in its positioning, the company could attack Competitor A on product availability and technical assistance and Competitor C on almost anything, but it should not attack B, which has no glaring weaknesses. As part of this competitive analysis for positioning, the firm should also ascertain the strategies and objectives of its primary competitors.
- #21 Associations that make up points-of-difference can be based on virtually any type of attribute or benefit. Strong brands often have multiple points-of-difference.
- #24 Three criteria determine whether a brand association can truly function as a point-of-difference: desirability, deliverability, and differentiability. Desirable to consumer. Consumers must see the brand association as personally relevant to them. Deliverable by the company. The company must have the internal resources and commitment to feasibly and profitably create and maintain the brand association in the minds of consumers. The product design and marketing offering must support the desired association. Differentiating from competitors. Finally, consumers must see the brand association as distinctive and superior to relevant competitors.
- #25 Regardless of the source of perceived weaknesses, if, in the eyes of consumers, a brand can “break even” in those areas where it appears to be at a disadvantage and achieve advantages in other areas, it should be in a strong—and perhaps unbeatable—competitive position. Consider the introduction of Miller Lite beer—the first major light beer in North America.
- #26 POP associations come in three basic forms: category, correlational, and competitive. Category points-of-parity are attributes or benefits that consumers view as essential to a legitimate and credible offering within a certain product or service category. In other words, they represent necessary—but not sufficient— conditions for brand choice. Correlational points-of-parity are potentially negative associations that arise from the existence of positive associations for the brand. Competitive points-of-parity are associations designed to overcome perceived weaknesses of the brand in light of competitors’ points-of-difference.
- #29 Michael Porter urged companies to build a sustainable competitive advantage. Competitive advantage is a company’s ability to perform in one or more ways that competitors cannot or will not match. But few competitive advantages are inherently sustainable. At best, they may be leverageable. A leverageable advantage is one that a company can use as a springboard to new advantages, much as Microsoft has leveraged its operating system to Microsoft Office and then to networking applications. In general, a company that hopes to endure must be in the business of continuously inventing new advantages that can serve as the basis of points-of-difference. Any product or service benefit that is sufficiently desirable, deliverable, and differentiating can serve as a point-of-difference for a brand. The obvious, and often the most compelling, means of differentiation for consumers are benefits related to performance (Chapters 13 and 14). For choosing specific benefits as POPs and PODs to position a brand, perceptual maps may be useful. Perceptual maps are visual representations of consumer perceptions and preferences. They provide quantitative pictures of market situations and the way consumers view different products, services, and brands along various dimensions. By overlaying consumer preferences with brand perceptions, marketers can reveal “holes” or “openings” that suggest unmet consumer needs and marketing opportunities. Many marketing experts believe a brand positioning should have both rational and emotional components. In other words, it should contain points-of-difference and points-of-parity that appeal to both the head and the heart. A person’s emotional response to a brand and its marketing will depend on many factors. An increasingly important one is the brand’s authenticity.
- #33 Often a good positioning will have several PODs and POPs. Of those, often two or three really define the competitive battlefield and should be analyzed and developed carefully. A good positioning should also follow the “90–10” rule and be highly applicable to 90 percent (or at least 80 percent) of the products in the brand. Attempting to position to all 100 percent of a brand’s product often yields an unsatisfactory “lowest common denominator” result. The remaining 10 percent or 20 percent of products should be reviewed to ensure they have the proper branding strategy and to see how they could be changed to better reflect the brand positioning. When a product is new, marketers must inform consumers of the brand’s category membership. Sometimes consumers may know the category membership but not be convinced the brand is a valid member of the category. Brands are sometimes affiliated with categories in which they do not hold membership. There are three main ways to convey a brand’s category membership: Announcing category benefits—To reassure consumers that a brand will deliver on the fundamental reason for using a category, marketers frequently use benefits to announce category membership. Comparing to exemplars—Well-known, noteworthy brands in a category can also help a brand specify its category Membership. 3. Relying on the product descriptor—The product descriptor that follows the brand name is often a concise means of conveying category origin.
- #36 it is important to regularly research the desirability, deliverability, and differentiability of the brand’s POPs and PODs in the marketplace to understand how the brand positioning might need to evolve or, in relatively rare cases, be completely replaced. In assessing potential threats from competitors, three high-level variables are useful: 1. Share of market—The competitor’s share of the target market. 2. Share of mind—The percentage of customers who named the competitor in responding to the statement “Name the first company that comes to mind in this industry.” 3. Share of heart—The percentage of customers who named the competitor in responding to the statement “Name the company from which you would prefer to buy the product.”
- #37 Rather than outlining specific attributes or benefits, some marketing experts describe positioning a brand as telling a narrative or story. Companies like the richness and imagination they can derive from thinking of the story behind a product or service. Based on literary convention and brand experience, the following framework is offered for a brand story: Setting. The time, place, and context Cast. The brand as a character, including its role in the life of the audience, its relationships and responsibilities, and its history or creation myth Narrative arc. The way the narrative logic unfolds over time, including actions, desired experiences, defining events, and the moment of epiphany Language. The authenticating voice, metaphors, symbols, themes, and leitmotifs Douglas Holt believes that for companies to build iconic, leadership brands, they must assemble cultural knowledge, strategize according to cultural branding principles, and hire and train cultural experts. Experts who see consumers actively cocreating brand meaning and positioning even refer to this as “Brand Wikification,” given that wikis are written by contributors from all walks of life and points of view.
- #38 Building brands is a challenge for a small business with limited resources and budgets. Nevertheless, numerous success stories exist of entrepreneurs who have built their brands up essentially from scratch to become powerhouse brands. When resources are limited, focus and consistency in marketing programs become critically important. Creativity is also paramount—finding new ways to market new ideas about products to consumers. Here are some specific branding guidelines for small businesses.